Three years ago, near the end of my term in the Unicameral, I was asked to lead Blueprint Nebraska and create an economic strategic plan alongside Nebraskans in business, government and community life.
Even with Nebraska’s strengths of land, location and people, many Nebraskans are impatient for change.
Through surveys, statewide public forums and the insights of hundreds of initiative volunteers, Blueprint Nebraska developed a 15-point plan to create a stronger, more competitive economy and to make Nebraska’s communities prosperous and attractive to business investment and growth. Recommendations of our plan were based on four basic growth themes:
Promoting high-wage, high-growth industries.
Enhancing our valued and valuable workforce.
Investing in our infrastructure and connecting our communities.
Building a simpler and more efficient and effective government.
Details of the report and its recommendations can be found at Blueprint-Nebraska.org.
As just one part of this process, Nebraskans identified the tax structure as a top-three concern for people and businesses. Of course, improving the tax climate doesn’t replace the need to focus on other areas where Nebraska can do better. But even states with other strengths — better weather, a more robust startup sector, or a perception of greater inclusivity — usually have additional tax advantages over Nebraska that produce economic benefits, whether we personally care about taxes or not.
Taxes are a highly political issue. But the new Blueprint Nebraska tax modernization framework shows we’re better served focusing on policy and shared values.
This plan is called modernization because it equips Nebraska for 21st century challenges. Currently, we have property taxes predating statehood, an inheritance tax from 1901, a sales tax designed around a Depression-era economy, and business tax incentives built on 1980s economic development concepts.
With the feedback of Nebraskans, academic tax research, and economic analysis from Regional Economic Models Inc., we’ve developed a new strategy that, while open to modification, achieves three bold and nonpartisan goals.
1. The Blueprint Nebraska tax plan rebalances the tax code to grow the workforce. Taxpayers making less than $50,000 a year would pay absolutely no state income tax, new student loan relief credits would recruit graduates in high-demand fields, and $2 billion would be added to property tax relief over 10 years.
2. The wealthiest Nebraskans would pay more, but at competitive tax rates. The plan contains three revenue-raising provisions that conservative and progressive tax experts widely agree is good policy: ending sales tax exemptions, removing income tax deductions, and curtailing corporate tax credits. The sales tax would not increase, nor would it apply to groceries or most exempt medical purchases. State revenues would increase, but at lower tax rates, comparable to our peer states. The wealthiest residents and largest companies would have fewer ways to avoid taxes, but a greater return on investing in Nebraska.
3. Independent economic analysis shows the Blueprint framework benefits all income groups, communities and industries statewide. An Omaha taxpayer making less than $50,000 would see a 28% reduction in tax burden. And with higher paychecks, lower property taxes, and no inheritance taxes, personal incomes for middle-class Nebraskans earning more than $50,000, but under $200,000, would increase by an additional $10.4 billion by 2031.
These outcomes also achieve a central Blueprint Nebraska goal — retaining or attracting an additional 73,000 residents above current projections over 10 years. More than 60% would be under age 34. By comparison, Nebraska netted fewer than 15,000 residents from 2010 to 2019.
The greatest increases in economic output are estimated to be in food manufacturing and agriculture, while construction, real estate, high-tech and professional services would see the greatest increase from $17 billion in new investment, boosting output more than $130 billion.
These figures do not include other Blueprint Nebraska initiatives: broadband deployment, housing and entrepreneurship policy, and more.
Asking people to pay sales taxes on currently exempt purchases is new and different. But average Nebraskans would pay little or no income tax, receive greater property tax relief, and their loved ones would be free of Nebraska’s inheritance tax.
Building this fairer, more balanced system will place taxes on a lower ranking of Nebraskans’ economic concerns. It will also retain and attract the future leaders who will help to make Nebraska a more welcoming state.
The writer, of Papillion, is president of Blueprint Nebraska and chief strategy officer at the Platte Institute.